Chapter 9

2. The Kitchen Aid Company uses electrical assemblies to produce an array of small appliances. One of its high cost / high volume assemblies, the JS-22 high speed blender, has an estimated annual demand of 8,000 units. Kitchen Aid estimates the cost to place an order is $90, and the holding cost for each assembly is $20 per year. The company operates 250 days per year.

A. What is the economic order quantity for the JS-22? (10 pts)

B. What is the annual inventory holding cost if Kitchen Aid orders using the EOQ quantity? (10 pts)

C. What is the annual ordering cost if Kitchen Aid orders using the EOQ quantity? (10 pts)

D. What is the total annual holding and ordering costs if Kitchen Aid orders using the EOQ quantity? (5 pts)

E. What is the cycle length (time between orders) when orders are placed using the EOQ quantity? (10 pts)

F. How many times per year must Kitchen Aid order the JS-22 when orders are placed using the EOQ quantity? (5 pts)